MEHTA, J. - The short question which has been referred in this reference is :

"Whether on the facts and in the circumstances of the case the transaction evidenced by bill No. 49 dated 19th January, 1964, is an indivisible works contract or whether it is a composite contract involving the sale of cement jali for an estimated value thereof ...."

The short facts giving rise to this reference are as under :-

The opponent-firm M/s. Sant Kabir Cement Moulding Works is manufacturing cement articles such as flower-pots, benches, sinks, kitchen platforms, jalis, windows etc. The opponent received a letter from an architect on behalf of a customer dated 28th December, 1963, in the following terms :

"You manufacture cement jalis according to designs. Please come with quotations for manufacturing and fitting jalis in the galas (apertures) after seeing our design."

The said contract was executed in the following manner. The design was selected by the customer from an album and after the selection of the design, the opponent-firm prepared rough cement blocks on rods. These materials were then taken to the site and they were fitted in the gala or aperture and fastened in the course of the building operation. When the work was completed it resulted in the jali of the required design. The opponent-firm thereafter preferred a bill, which in this case was bill No. 49, dated 19th January, 1964, in the following words :-

"Gala fitted a cement jali of block danda type in your bungalow according to the measurement 3'.11" X 6'.9"... Complete. Rs. 159.19 ..."

On an application under section 52 the Deputy Commissioner of Sales Tax held that this transaction involved a sale of cement jali for an estimated value thereof. In appeal the Tribunal held that the contract was one and indivisible works contract and that it did not involve the sale of jali as such. The Tribunal accordingly allowed the appeal. The Tribunal has, therefore, referred the present question to this Court.

The principles for determination of a contract of sale and a works contract are now well settled. In the State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. ([1958] 9 S.T.C. 353), their Lordships at page 381 examined the nature and incidents of works contracts according to the various English decisions. The decision in Tripp v. Armitage [(1839) 4 M. & W. 687; 150 E.R. 1597] was noted, where a builder had entered into an agreement to build a hotel. The agreement provided inter alia that the articles which were to be used for the structure had to be approved by the trustees. When the builder became bankrupt, the dispute arose between his assignees in bankruptcy and the trustees as regards title to certain wooden sash-frames which had been approved on behalf of the trustees but had not yet been fitted in the building. The trustees claimed them on the ground that property therein had passed to them when once they had approved the same. Lord Abinger, C.B., negativing this contention observed :

".......this is not a contract for the sale and purchase of goods as movable chattles; it is a contract to make up materials, and to fix them; and until they are fixed, by the nature of the contract, the property will not pass."

Parke, B., observed :

"......but in this case, there is no contract at all with respect to these particular chattles, it is merely parcel of a large contract. The contract is, that the bankrupt shall build a house; that he shall make, amongst other things, window-frames for the house, and fix them in the house, subject to the approbation of a surveyor; and it was never intended by this contract, that the articles so to be fixed should become the property of the defendants, until they were fixed to the freehold."

This decision had been approved by the House of Lords. Thereafter, their Lordships considered the principle of accretion under which title to the party passes. At page 386 their Lordships pointed out that there could be no question of title to the materia